The debate was brought about by Conservative MP for Aberconwy Guto Bebb, who tabled the motion that “this House believes that the FCA in its current form is not fit for purpose and we have no confidence in its existing structure and procedures”.
He kicked things off by stating it is four years since he first raised the issue of interest swap mis-selling in the chamber, followed by three back-bench debates on the issue, an adjournment debate on the Connaught Income fund and a debate on the Royal Bank of Scotland global restructuring group.
Mr Bebb said: “Some people have argued that this debate and this motion are premature. Given the evidence and information that I will present, I argue that they are long overdue.”
Conservative MP for Twickenham Tania Mathias contended the FCA has been too slow and not transparent enough for investors.
Mr Bebb questioned whether yesterday’s Connaught Income fund announcement of a settlement would result in full compensation for investors.
The MP moved on to the FCA’s decision to cancel a review into banking culture, without consultation with its board and contrary to objectives set out in a public meeting on 22 July.
“When that was pointed out to the FCA when it announced its decision to curtail the inquiry, it denied to The Financial Times that the issue of a review had ever been raised at a public meeting.
“However, the minutes of that public meeting are clear, and the regulator was stating an untruth to our No. 1 financial paper,” said Mr Bebb. “That does not give me any confidence in the regulator.”
Mark Garnier, a Conservative MP for Wyre Forest and member of the Treasury select committee, agreed there is plenty of evidence for how the regulator is “not necessarily standing up for the consumer”, but argued a motion of no confidence deserves a “more rounded view”.
He suggested MPs have “been guilty of what sports commentators do when a poor goalkeeper successfully saves many shots, but, when he lets through one crucial goal”, and is criticised by everybody for not being up to the job.
Mr Bebb responded as an Everton supporter, he has been patient with goalkeeper Tim Howard.
He said: “It is not that he made one mistake and allowed one goal to be scored; he has conceded half a dozen such goals this season. It is the same with the regulator. It is not the one mistake that we complain about; it is a pattern of behaviour.”
It is not that he made one mistake and allowed one goal to be scored; he has conceded half a dozen such goals this season. It is the same with the regulator. Guto Bebb MPDuring a session that lasted over two hours, Scottish National Party MP for Edinburgh South West Joanna Cherry shared concerns that financial advisers, many of whom were also investors in the Connaught fund, risk continuing to be blamed for losses relating to it because of the FCA’s failure to investigate within a reasonable timescale.
Her SNP colleague Kirsten Oswald, MP for East Renfrewshire, agreed and made a wider complaints about the Financial Ombudsman Service and the Financial Services Compensation Scheme being part of the problem, rather than part of the solution.
She stated levies and fines should be reviewed.
“I have particular concerns about the operation of professional indemnity insurance in the IFA sector,” she said, noting when insurers exempt schemes known to be causing concerns that undermines the reality of IFA protection and causes significant problems for them.
Ms Oswald said: “The FCA needs to look at making significant changes to the insurance rules.”
At nearly 10pm, the economic secretary to the Treasury Harriett Baldwin stood and admitted “there are clearly still challenges ahead for the FCA”, but added it is worth remembering the positive steps that it has already taken.
She pointed to the new senior managers and certification regime, along with improved whistleblowing requirements, a new remuneration code and action taken in the regulation of consumer credit.
In terms of the banking review cancellation, Ms Baldwin said the first time she heard was when the story broke in the media on New Year’s Eve.
She said: “We have made it abundantly clear to the House that no Treasury Minister or official was involved in the FCA’s decision, and the FCA has made it clear that it did not inform the Treasury before the decision was made public.”
Again conceding that “the FCA has a tough job ahead”, she reiterated her confidence that the FCA has the right mandate and team.
“I believe that today’s motion is neither well founded nor well timed, given that a new chief executive and a new team are in place. I strongly urge honorable members to ignore the motion before us tonight.”
Mr Bebb accepted suggestions about the danger of passing a motion that would subsequently be ignored by the government, but argued that after hearing 13 back-bench speeches, only two were mildly supportive of how the FCA is operating.
“There is an important message in that point: the FCA does need to reform.”
peter.walker@ft.com
